Wellington’s real estate market in 2025 is at a turning point. After a boom during 2020-21 and a subsequent downturn, property values are stabilizing and buyer confidence is cautiously returning loweandco.nz globalpropertyguide.com. The region’s housing prices have fallen about 25% from their late-2021 peak loweandco.nz, improving affordability, while ultra-low rental vacancies in previous years have given way to a softer rental market in 2025 interest.co.nz interest.co.nz. On the commercial side, Wellington’s office sector faces rising vacancies as new supply comes online, even as industrial spaces remain in high demand with scant availability research.jllapsites.com linkedin.com. Major infrastructure projects and zoning reforms are reshaping the urban landscape, setting the stage for the coming years. This report delves into all aspects of Wellington’s property market – residential trends, commercial performance, urban development, economic drivers – and provides an outlook through 2028, backed by the latest data and forecasts.
Residential Real Estate Trends
Home Prices and Sales Activity
Wellington’s housing market has weathered a significant correction but is showing signs of bottoming out in 2025. The median house price in the Wellington region is about NZ$760,000 as of mid-2025, down 4.4% year-on-year squirrel.co.nz globalpropertyguide.com. This marks a notable drop from the pandemic-era highs – prices are roughly 26% below the late-2021 peak in value loweandco.nz. Over the most recent quarter (Q2 2025), average values in Wellington fell a modest ~2.3%, indicating the pace of decline has eased to a crawl loweandco.nz. In fact, Wellington’s house price index dipped only ~1% in the last quarter, suggesting the market is stabilizing rather than spiraling downward loweandco.nz. Transaction volumes have also picked up from last year’s doldrums: sales in mid-2025 were ~13% higher than a year prior, despite a usual winter slowdown squirrel.co.nz. Homes are taking longer to sell than in the boom times – the median days on market is around 54 days as of June 2025, reflecting cautious buyer sentiment squirrel.co.nz. However, this is an improvement from earlier in the downturn; time-to-sell had shortened to ~41 days by early 2025 as sellers became more realistic on price loweandco.nz. Overall, Wellington’s residential market in 2025 can be characterized as moving from a buyer’s market toward equilibrium, with pricing finding a floor and sales volumes recovering gradually.
Median House Prices (June 2025) globalpropertyguide.com
| Region | Median Price (NZD) | YoY Change |
|---|---|---|
| Wellington | $760,000 | –4.4% |
| Auckland | $990,000 | –3.4% |
| New Zealand (all) | $770,000 | 0.0% |
Table: Wellington’s median price remains slightly below the national median, one of the few regions still down year-on-year in mid-2025 globalpropertyguide.com.
Rental Market and Affordability
After years of tight supply and surging rents, Wellington’s rental market has flipped to favor tenants in 2025. Rental asking prices have softened, and more properties are available to rent than a year ago. In May 2025, the median asking rent in Wellington fell to about $620/week, down 4–5% from a year earlier interest.co.nz. Trade Me (a major property listing site) reports an influx of rental listings in the region – rental supply jumped ~41% compared to last year, while tenant inquiries (demand) dropped ~13% interest.co.nz. With more options on the market, rents have cooled in the capital interest.co.nz. In fact, Wellington led the country in annual rent declines, as landlords competed for fewer renters interest.co.nz. This is a striking reversal from the prior decade and offers some relief for tenants.
Housing affordability has improved alongside the price correction and wage gains. Wellington’s average house value is now roughly 5.7 times the average household income, which is better than the national average of ~6.5× income ecoprofile.infometrics.co.nz. Likewise, the share of income needed to service an average mortgage in Wellington (with 20% down) is around one-third, slightly lower than NZ overall ecoprofile.infometrics.co.nz. These metrics, while still high by international standards, are the best the capital has seen in several years – a direct result of prices coming off their peak. For context, Wellington’s median multiple was near 8× income at the height of the boom; by 2025 it’s back in the 5–6× range ecoprofile.infometrics.co.nz. First-home buyers have capitalized on this improved affordability and less competition: they have become the largest buyer group in Wellington, “leading the charge” in purchase activity squirrel.co.nz loweandco.nz. With prices down and interest rates past their peak, many renters are finally seeing a pathway to ownership, which is supporting demand for entry-level homes.
Buyer Demographics and New Developments
The buyer mix in Wellington in 2025 is notably different from a few years ago. First-home buyers and young families upsizing are very active, while investors had largely pulled back during the downturn squirrel.co.nz loweandco.nz. Industry reports note that first-home purchasers and downsizers together account for a large portion of active buyers in the capital loweandco.nz. These groups are attracted by the combination of softened prices in good suburbs and greater certainty now that mortgage rates have steadied loweandco.nz 1news.co.nz. By contrast, many leveraged investors spent 2022–2024 reducing exposure – some landlords have been selling off properties, due to low yields and previous tax changes squirrel.co.nz. (Notably, Wellington’s gross rental yields, ~4.5–5%, are a bit higher than Auckland’s, but still not enticing when mortgage rates were 6%+ opespartners.co.nz opespartners.co.nz.) There are early signs that investors may start returning: a new government in late 2023 restored some investor-friendly tax policies, and with prices now lower and yields improving, property investment in Wellington looks more viable going forward. Any resurgence of investors will likely be gradual, but it remains an upside factor for demand heading toward 2026.
On the supply side, Wellington has seen a slowdown in new housing development recently, which could tighten the market in coming years. Building consents in the region dropped sharply (around 28% year-on-year by late 2024) after a construction surge in previous years loweandco.nz. Rising construction costs, financing constraints, and the market downturn led builders to pull back. As a result, the pipeline of new homes for 2025–2027 is more limited. This is a double-edged sword: in the short term the oversupply of listings is easing, helping stabilize prices; but by 2026–2028, a construction lull now could mean housing shortages re-emerge, potentially putting upward pressure on prices and rents again.
At the same time, urban intensification policies are unlocking future supply. Wellington City implemented a new District Plan in 2023 that up-zones many areas for higher-density housing. Under government-mandated rules, most residential neighborhoods can now build up to 3 homes of 3 storeys without special consent, and parts of the city and suburbs near transit hubs are zoned for 6+ storey apartment buildings. Several medium-density projects are already underway or in planning stages as a result. Over the next few years, the city expects to see more infill townhouses and low-rise apartments, especially around the CBD fringe and suburban centers. These zoning changes aim to boost housing construction and improve affordability long-term. While the impact in 2025 is just beginning, by 2028 the easier planning rules could lead to notable increases in Wellington’s housing stock – helping to meet the needs of a growing population and temper excessive price growth.
Commercial Real Estate Overview
Office Sector: Demand, Supply and Rents
Wellington’s office property market in 2025 is navigating a period of rising vacancies and looming new supply. The overall CBD office vacancy rate has risen to about 8.0% as of early 2025, up from ~5–6% pre-pandemic research.jllapsites.com. This uptick is partly due to several large tenants (especially government agencies) consolidating or subleasing space. In the last few months, roughly 16,000 m² of sublease space was put on the market by public sector occupiers, with another ~13,000 m² from private firms research.jllapsites.com. Essentially, downsizing by some offices – a response to both fiscal belt-tightening in government and increased remote/hybrid work – has introduced a wave of secondary space seeking tenants. At the same time, significant new supply is in the pipeline. An example is the new 11-storey office tower at 61 Molesworth Street (in the parliamentary precinct), coming online in late 2025 with the Ministry of Foreign Affairs as anchor tenant research.jllapsites.com. Additionally, multiple older office buildings are undergoing seismic strengthening and refurbishments (e.g. on The Terrace and along the waterfront) and are scheduled to re-enter the market by 2026–2027 research.jllapsites.com. As these projects complete, vacancy is expected to increase further over the next two years, testing the market’s capacity to absorb space.
Despite higher vacancy, office rents in prime buildings have held steady so far. Prime gross face rents in Wellington CBD average around $750+ per m² annually, with net rents about $430–435/m² – roughly unchanged in recent quarters research.jllapsites.com. Landlords have maintained headline rents, though incentives for tenants (like rent-free periods or fit-out contributions) have grown more generous in this competitive environment. In secondary-grade offices, effective rents are under pressure given the nearly 10% vacancy rate in that segment research.jllapsites.com. Overall, rent growth is flat, and tenants have more choice and bargaining power than a few years ago. Newer, high-grade space is still in demand (especially those with high seismic ratings and green credentials), while older unrefurbished stock may struggle to lease. The outlook for Wellington offices hinges on economic and public sector trends: with the government pursuing a conservative spending strategy, its footprint may shrink further research.jllapsites.com. However, if business and tech sector growth picks up in the late 2020s, it could offset some of the public sector downsizing. For now, caution prevails, and we anticipate Wellington’s office vacancy to hover in the high single digits through 2026, keeping rental growth modest. Opportunities lie in tenant upgrades (flight to quality) and repositioning older buildings (including potential office-to-residential conversions if feasible), especially as sustainability requirements increase.
Retail and Hospitality Space
Wellington’s retail real estate is showing a mixed but generally improving picture. Prime retail locations in the CBD – particularly the “Golden Mile” of Lambton Quay, Willis Street, and Courtenay Place – enjoy very strong demand. Vacancy for prime CBD retail is almost nil: just ~1.1% of prime space was vacant at the end of 2024 insideretail.co.nz insideretail.co.nz. International and national retailers have renewed interest in Wellington, with several brands either expanding flagship stores or entering the market for the first time insideretail.co.nz. Leasing inquiries in early 2025 have been steady, as retailers position themselves for an expected uplift in consumer spending once interest rates ease and confidence returns insideretail.co.nz. For instance, larger format and luxury brands have been scouting for space on Lambton Quay, anticipating better trading conditions ahead.
Secondary retail precincts, however, are still catching up. The overall Wellington city retail vacancy was ~8.5% in late 2024, up from ~6.9% a year earlier insideretail.co.nz. Much of these vacancies are concentrated in the Courtenay Place precinct and some less foot-trafficked blocks insideretail.co.nz. These areas were hit hard by pandemic disruptions (e.g. loss of international tourists and office workers) and have taken time to recover. Encouragingly, there are “positive signals of growth and regeneration” now in Courtenay Place – including new hospitality operators and planned property upgrades – which are expected to gradually lift occupancy insideretail.co.nz. The City Council’s Courtenay Place revitalization project (as part of the Golden Mile upgrade) kicked off in 2025, bringing streetscape improvements that should make the area more attractive to shoppers and diners. In sum, Wellington’s retail sector is bifurcated: prime CBD retail is thriving, with virtually full occupancy and rising rents, while some peripheral retail areas are still in recovery mode. As consumer spending improves towards 2026 (helped by population growth and lower mortgage costs), even the lagging spots are forecast to fill in. New developments like the Takina Convention Centre (opened 2023) are also boosting foot traffic for nearby retailers and eateries, supporting the hospitality real estate segment.
Industrial and Logistics Property
The industrial real estate market in Wellington remains exceptionally tight, even as economic growth slowed. Warehouse and factory space is in short supply, with vacancy only around 2–3% region-wide – near historic lows. A Colliers survey in late 2024 put Wellington’s industrial vacancy at 2.4% (the highest since 2020, yet still extremely low) linkedin.com. Basically, almost all usable industrial stock is occupied, and any space that comes available is quickly taken up. The slight rise in vacancy from near-1% to 2.4% likely reflects a few larger facilities becoming vacant plus a softer economy, but there is still far more demand than supply for Wellington industrial sites linkedin.com. Crucially, development of new industrial stock has slowed to a crawl – consents for new industrial buildings are at their lowest in nearly a decade linkedin.com. Land shortages in the Wellington region (hemmed in by hills and harbor) persist, especially in traditional industrial precincts like Seaview, Petone, Porirua and the Rongotai/Airport area linkedin.com. With limited greenfield land and high construction costs, few new warehouses are being built even though tenants are seeking modern space.
This supply-demand mismatch has kept industrial rents on an upward trajectory. As of 2024, prime warehouse rents in Wellington average roughly $170–180 per m² per annum linkedin.com. Although rent growth has moderated recently due to economic headwinds, rents are still at record highs and have only “eased” in their growth rate linkedin.com. Investors remain bullish on Wellington industrial property: yields have compressed in past years but seem to have stabilized in 2025, generally in the mid-5% range for prime assets. Market sentiment is that industrial is the “resilient” sector likely to outperform – underpinned by the structural trends of e-commerce, logistics needs, and the near-zero vacancy providing pricing power to landlords linkedin.com. Indeed, confidence is returning among industrial investors, with expectations of an economic recovery boosting this segment into 2025 linkedin.com. Barring a major downturn, Wellington’s industrial market outlook is positive: rents should stay strong (possibly rising further if no new supply arrives), and any new high-stud warehouse that hits the market in 2025–2028 will likely secure tenants quickly. The key challenge will be finding ways to develop more industrial space (e.g. repurposing underused land or increasing multi-story warehousing) to accommodate future demand.
Urban Development and Infrastructure Impact
Multiple infrastructure projects and urban initiatives are underway in Wellington, poised to significantly influence real estate patterns through the late 2020s. A headline initiative is the long-awaited “Let’s Get Wellington Moving” transport program – which, although restructured in 2023, will deliver major improvements. In late 2023 the government committed to fully fund a second Mt. Victoria road tunnel and an upgrade of the Basin Reserve intersection transport.govt.nz. This second tunnel (paralleling the 1930s Mt. Vic Tunnel) is expected to begin construction by 2025–26 under the new Government’s mandate and, once completed late this decade, will dramatically improve connectivity between the central city and Wellington’s eastern suburbs (as well as the airport) by adding road capacity and dedicated walking/cycling paths. The easier commute and access could bolster residential demand in suburbs like Kilbirnie, Miramar, and Hataitai – potentially lifting property values there as travel times drop. At the Basin Reserve, redesigning that busy junction will unclog a notorious bottleneck, benefiting nearby Te Aro and Newtown areas.
Within the city, the Golden Mile revitalization is another transformative project. This $120+ million plan will pedestrianize and upgrade Wellington’s main downtown retail strips (Lambton Quay through to Courtenay Place), making them more people-friendly. Work began in 2025, including new cycle lanes, wider footpaths, and restricting cars during peak hours transportprojects.org.nz transportprojects.org.nz. As this is completed by 2027, the Golden Mile’s enhanced streetscape should further boost the CBD’s retail and hospitality attractiveness – a positive for property values and rents of shops, offices and hotels along the route. Some short-term disruption from construction is expected, but longer-term, retail vacancies should decline and foot traffic increase, supporting higher retail rents and redevelopment of aging buildings into modern retail or mixed-use spaces.
Wellington’s public transport infrastructure is also set for improvements. Plans for a new mass rapid transit line (light rail or bus rapid transit) from the railway station through the southern/eastern suburbs were part of LGWM. While the mass transit project’s form is still being decided (and was put on hold amid the 2023 program shake-up), there is ongoing work on enhancing the existing bus network with continuous bus priority lanes and potentially higher-capacity vehicles. The rail network serving the Wellington region’s suburbs is receiving upgrades too – new train units are on order for the metro lines, and service frequency increases are planned by Metlink toward 2026. Efficient transit is crucial for supporting higher-density housing development along key corridors (Johnsonville line, Hutt line, etc.), and areas around train stations (Johnsonville, Tawa, Porirua, etc.) that are now zoned for apartments will become more attractive as transit service improves.
Beyond transport, other infrastructure and development projects will influence the real estate landscape:
- Waterfront and Seismic Strengthening Projects: The city continues to invest in resilience – e.g. strengthening the Wellington seawall and improving drainage to mitigate flood risk. Several heritage buildings are being earthquake-strengthened or redeveloped (the Town Hall restoration finishes in 2025, a new earthquake-resilient convention center opened in 2023). A safer, more resilient built environment enhances long-term property values and insurability.
- Suburban Expansion: In the northern suburbs and satellite cities, new housing subdivisions are proceeding. For instance, large greenfield developments in Porirua (Kenepuru Landing, Plimmerton Farm), Upper Hutt (Kelson and Wallaceville estates) and Lower Hutt (Wainuiomata and Stokes Valley new housing areas) are adding thousands of homes over the next 5–10 years. These projects will gradually expand the region’s housing supply and shift some growth to outer areas. Notably, the 2022 opening of the Transmission Gully motorway improved access to Kapiti Coast and Porirua, spurring more interest in those areas’ real estate.
- Commercial Precinct Developments: Wellington’s tech sector is quietly growing; initiatives like the Takapu Valley Tech Hub and expansion of Wellington Science and Innovation precinct (near Gracefield) may drive demand for specialized commercial real estate (labs, offices) by 2028. Additionally, if the film industry (centered in Miramar) continues to thrive, we could see investment in new studio facilities or creative industry office parks, further anchoring Wellington as a creative capital.
Overall, Wellington’s current infrastructure investments aim to increase the city’s capacity and livability, which in turn supports the real estate market. Better transport links will unlock new residential areas and allow higher densities without congestion. Urban amenity upgrades will make the city core more vibrant – encouraging people (and businesses) to locate in Wellington. These developments set the stage for sustainable property market growth heading into the late 2020s.
Economic and Demographic Influences
Population and Migration Trends
Demographic currents are a foundational factor for Wellington’s real estate outlook. The region’s population is growing, but modestly compared to the national rate. Greater Wellington reached about 541,500 people in 2024, up ~0.7% on the year rep.infometrics.co.nz. This growth rate is lower than New Zealand’s overall 1.7% in the same period rep.infometrics.co.nz, reflecting that the capital didn’t benefit as much from the post-pandemic migration boom as Auckland or Christchurch. In fact, after New Zealand’s borders reopened in 2022, the country saw a record influx of migrants in 2023–24 (net migration exceeded +100,000 in 2024) – but a large share of these settled in Auckland or elsewhere. Wellington did gain some overseas migrants (international students, skilled workers in IT and government), yet it also saw continued net outflow of New Zealanders to Australia, which offset part of the gain stats.govt.nz 1news.co.nz. By early 2025 the migration tides have turned again: the latest data show net migration slowing considerably (to ~+26,000 nationally in year to March 2025, down from the huge prior year) stats.govt.nz. For Wellington, this likely means population growth will remain moderate, around 0.5–1% annually, unless a new wave of migrants specifically targets the capital. The 2023 Census count for Wellington region was ~521,000 (for usually resident population) stats.govt.nz, and projections suggest a steady climb to ~560,000 by 2028 (roughly +1% p.a.). Key implication: Wellington’s housing demand will grow, but not explode – a manageable pace that, combined with new housing supply coming, could keep the market balanced.
It’s also noteworthy that internal migration within New Zealand has favored some smaller North Island centers at Wellington’s expense recently. High housing costs and a shift to remote work led a trickle of Wellingtonians to move to regions like Wairarapa or Palmerston North in 2020–22. However, as Wellington’s affordability improves and offices call people back in-person, the city could retain and attract more residents again. The region’s relatively high education and income levels act as a draw. Moreover, Wellington’s population has a younger-adult skew (due to universities and government jobs), which generates natural housing demand as renters transition to first-home buyers, etc. Over 2025–2028, any significant change in immigration policy or a rebound in international student numbers (Victoria University, for example) would directly increase rental and entry-level buyer demand in Wellington. In summary, demographics provide a gentle tailwind: Wellington will grow, supporting real estate, but not so rapidly that it overheats purely from population pressure.
Employment and Income Factors
The health of Wellington’s job market is critical for its property sector, given the city’s role as New Zealand’s administrative and tech hub. Employment in Wellington has been relatively stable through recent economic swings. The region’s unemployment rate was around 3.4% in 2024, up from record lows (~2.8%) but still better than the national unemployment (~5% by 2025) rep.infometrics.co.nz stats.govt.nz. Government sector hiring had expanded significantly during 2018–2022, which supported the local economy, but a change of government late 2023 brought a focus on fiscal restraint. In 2024, public agencies in Wellington faced budget cuts and reviews, creating some job uncertainty in the public sector loweandco.nz. Some contractors lost work and certain ministries consolidated teams (impacting office space as noted). This has introduced a cautious sentiment among buyers – many of whom work in government – tempering their willingness to stretch budgets for housing loweandco.nz. That said, the core public service remains a huge and stable employer, so a mass exodus of jobs is not expected. By 2025, most of the downsizing appears to have been modest and one-off. If anything, Wellington’s knowledge economy is diversifying: growth in IT firms, startups, and the screen industry is adding private-sector jobs that compensate for any shrinkage in government roles.
Importantly, incomes in Wellington are among the highest in NZ, which underpins housing affordability and borrowing capacity. The median household income in Wellington City is ~15% above the national median. Steady wage growth in the 3–4% range annually over 2020–2024 means many households have more earnings now to deploy towards mortgages (even as interest costs rose). This helped limit mortgage stress: as of mid-2024, Wellington had a lower proportion of households spending over 40% of income on housing than most regions ecoprofile.infometrics.co.nz. Looking ahead, a forecast rise in unemployment to perhaps ~4–5% (if the economy slows in 2025) would still be relatively mild and likely short-lived. By 2026–27, as the wider NZ economy picks up, Wellington should see employment growth resume, especially if government loosens the purse strings or invests in infrastructure (as is often done to stimulate growth).
In summary, employment prospects for Wellington remain solid, albeit with a watchful eye on public sector policy. Stable jobs and rising incomes give people the confidence to buy homes or sign commercial leases. One risk to note: Wellington’s heavy reliance on knowledge-sector jobs means any sudden shift (e.g. outsourcing, automation, or a big agency moving away) could hit the property market. Conversely, as the capital, Wellington might benefit from any increase in government spending in future (for instance, if economic stimulus is needed) – which could boost hiring and office occupancy again. For now, the city’s diversified professional workforce and low jobless rate provide a firm foundation for its real estate market through 2028.
Interest Rates and Inflation
The trajectory of interest rates has been a dominant factor in Wellington’s property cycle. After the Reserve Bank of NZ (RBNZ) hiked the Official Cash Rate aggressively from 2021 to mid-2023 (to combat high inflation), borrowing costs roughly tripled from their pandemic lows. By 2023, average mortgage rates hit around 6%–7% (for fixed terms), which significantly reduced buyers’ purchasing power and contributed to the housing price slump. The good news in 2025 is that the rate cycle has turned a corner: inflation has been brought down into target range, allowing rates to ease. Annual inflation in NZ cooled to ~2.7% by mid-2025, the lowest in nearly two years squirrel.co.nz squirrel.co.nz. The RBNZ, having succeeded in curbing price pressures (down from ~7% inflation in 2022), began cutting the OCR in late 2024. As of mid-2025, the OCR stands at 3.25% 1news.co.nz, down from its 5.5% peak. This has translated into meaningful relief for borrowers: typical 1-year fixed mortgage rates have fallen to ~5.6% (from ~6.5% a year prior) 1news.co.nz 1news.co.nz. Similarly, floating mortgage rates are under 7% on average now, whereas they were near 8% in 2023 1news.co.nz 1news.co.nz.
These interest rate cuts are a key reason the housing market is stabilizing. Lower debt servicing costs improve affordability – for example, each percentage point drop in mortgage rates increases how much a median Wellington buyer can pay for a home without raising their monthly payment. The expectation is that rates will fall only gradually from here. Economists anticipate perhaps one more minor OCR cut by the end of 2025, then a plateau 1news.co.nz 1news.co.nz. Banks like ASB and ANZ are signaling that most of the mortgage rate declines have run their course for now 1news.co.nz 1news.co.nz. Thus, buyers should not expect a return to the ultra-low 3% mortgages of 2021; instead, rates might settle in the 4–5% range in coming years, which is historically normal. From the property market’s perspective, interest rates in 2025–2028 are likely to be neutral to supportive: high enough to keep borrowing discipline, but low enough (relative to inflation and income growth) to encourage transactions. Notably, investors who were squeezed by the high rates can better justify purchases as yields and mortgage rates converge.
On the inflation front, Wellington residents are seeing cost-of-living pressures ease slightly. Aside from housing, one cost that jumped was local body rates (taxes), which rose sharply (Wellington City Council enacted a large rates increase in 2024). Some of that feeds into inflation measures. But overall, with global supply chains stabilizing and consumer spending subdued, inflation is expected to hover around 2–3% – right in RBNZ’s target band. This stability means no shocks to interest rates are anticipated; the era of rapid rate hikes is over unless a new inflation surge occurs. For the commercial property sector, this environment also implies cap rates (yields) could flatten out. Through 2022, cap rates rose as interest rates rose; now with rate relief, we’re seeing cap rate stabilization in Wellington’s office and industrial markets linkedin.com. Investors are no longer demanding ever-higher yields to beat the rising cost of debt. All told, low inflation and gently falling interest rates form a positive backdrop for Wellington real estate through 2028, supporting a sustainable level of price growth and investment activity.
Investment Outlook: 2025 to 2028
The outlook for Wellington’s property market over the next few years is cautiously optimistic, with moderate growth expected but also some risks to navigate. Here’s what investors and observers can anticipate:
- Home Price Growth to Recover Modestly: After bottoming out in 2024–25, Wellington house prices are projected to rise gradually through 2028. Consensus forecasts point to single-digit annual gains rather than another boom. A Reuters poll of analysts forecasts NZ home prices will increase about +3.8% in 2025, then accelerate to +6.0% in 2026 and +5.1% in 2027 globalpropertyguide.com. Wellington may start a bit slower (given its larger correction), but by 2026 could broadly track those national gains. Banks like ANZ similarly predict 2.5–4.5% price growth in 2025 loweandco.nz. The drivers for this rebound: improved affordability, population growth (albeit modest), and much reduced housing construction which will tighten supply by 2026. However, rapid price inflation is not expected – lingering affordability constraints and cautious buyer sentiment will likely “temper growth”, keeping it gradual loweandco.nz. Essentially, Wellington’s housing market is entering a period of measured recovery rather than a speculative upswing.
- Rental Yields and Investor Strategy: With house prices down and rents only slightly down, rental yields in Wellington have actually improved from their lows. Gross yields now average around 4.5–5% for residential properties opespartners.co.nz opespartners.co.nz, up from ~3–4% at the peak of the market. This level is slightly above the national average yield opespartners.co.nz opespartners.co.nz and makes holding property more financially sustainable for investors. In fact, Wellington “stands out” for relatively decent rent-to-price ratios – for example, the rent on a median Wellington home is about 23% of the median household income, better than Auckland’s affordability ecoprofile.infometrics.co.nz. As interest rates ease, cash-flow prospects for landlords will brighten further. We may see earlier entrants (who bought at peak prices) continue to deleverage, but new investors are eyeing opportunities, especially in segments like townhouses which can achieve ~4.8% yields, or dual-key apartments at ~6% yield opespartners.co.nz opespartners.co.nz. With the reinstatement of tax deductibility on interest (if fully confirmed by 2025 policy changes), Wellington’s rental investment could become more attractive. Overall, investors are likely to remain yield-focused, favoring properties that either have solid rental return or potential to add value (e.g. through minor dwellings or renovations to increase rent).
- Risks to Watch: A few risks could cloud the horizon. One is the broader economy – if New Zealand were to enter a deeper recession than forecast (due to global shocks or a sharp Chinese/Australian slowdown), Wellington’s housing demand would soften and commercial tenants could retrench. Unemployment rising above, say, 6% would hit confidence. Another local risk is natural disaster: Wellington’s location on seismic fault lines means the possibility of an earthquake always looms. A significant quake could temporarily depress the market and redirect investment (though modern building codes and ongoing strengthening efforts mitigate damage risk). Additionally, policy changes present uncertainty. While the current government is pro-housing-development, any drastic changes like new tax rules or credit restrictions could impact investor behavior. For instance, if the Reserve Bank re-imposes tighter loan-to-value ratio (LVR) limits in future to cool any exuberance, that might slow the market. On balance, these risks are manageable, but investors should maintain prudent buffers and insurance, given Wellington’s unique profile.
- Opportunities Ahead: Wellington’s market offers some distinct opportunities looking toward 2028. The move toward urban intensification opens chances in development and redevelopment – savvy investors might assemble older properties in up-zoned areas (e.g. near transit hubs) to build townhouses or apartments to meet pent-up demand. The apartment sector in Wellington has lagged (most Kiwis prefer houses), but with affordability tight, modern apartments in good locations could see increased uptake, providing a growth niche. In commercial real estate, the office market’s flux is an opportunity for tenants to upgrade to better space at negotiable terms, and for investors to reposition aging office stock (possibly converting some fringe offices to residential, which Wellington has started to see). The industrial sector remains an attractive play – any development in this scarce asset class, or even land banking industrial-zoned land, is likely to yield good returns as logistics needs grow. Furthermore, Wellington’s quality of life and “cool little capital” vibe continue to attract a creative workforce – as long as that holds, demand for both character homes in walkable neighborhoods and creative office spaces (studios, coworking hubs) should persist.
Expected Scenario Through 2028: Wellington’s real estate market is set to enter a period of sustainable expansion rather than unsustainable boom. We expect slow house price growth in the next few years, as inventory remains ample and buyers stay value-conscious 1news.co.nz. Ample listings and new housing coming online will prevent runaway prices in the mid-term 1news.co.nz 1news.co.nz. By 2026–27, if economic conditions are strong, price growth could pick up somewhat, but likely capped in single digits annually. Rents may resume rising after 2025 once the current surplus is absorbed, but large rent spikes are unlikely given recent highs and new supply of rentals (e.g. landlords pivoting from short-term Airbnb to long-term leases adding to supply). Real estate investors can expect modest capital gains plus improved rental yields – a more income-oriented return profile versus the hefty capital gains of the 2010s.
In conclusion, Wellington’s property market in 2025 has regained its footing after a correction and is poised for gradual growth with fewer extremes. The combination of a stabilizing economy, critical infrastructure upgrades, and prudent housing policies is creating a backdrop for a healthier market. Both residential and commercial sectors have their challenges (affordability and oversupply in some segments, respectively) but also clear signs of resilience and adaptation. Barring any shocks, Wellington by 2028 should see higher property values than today, a more modern housing stock (thanks to infill development), and a city that remains one of New Zealand’s most desirable places to live and do business – truly the “coolest little capital” sustaining its real estate vibrancy.
Sources: Official data and reports including Real Estate Institute of NZ (REINZ) releases squirrel.co.nz globalpropertyguide.com, regional economic profiles rep.infometrics.co.nz ecoprofile.infometrics.co.nz, property agency analyses (Lowe & Co, Squirrel Mortgage) loweandco.nz squirrel.co.nz, JLL and Colliers market research research.jllapsites.com linkedin.com, and news commentary from 1News, RNZ, and others 1news.co.nz stats.govt.nz, as cited throughout. These provide the latest 2025 insights and forward-looking projections for Wellington’s real estate market.
